UBS Best of Americas Conference. Eagle Bulk Shipping Inc. 11 September Eagle Bulk Shipping Inc. DELIVERING SUSTAINABLE GROWTH

Transcription

1 Eagle Bulk Shipping Inc. UBS Best of Americas Conference 11 September 2008 DELIVERING SUSTAINABLE GROWTH

2 Forward Looking Statements This presentation contains certain statements that may be deemed to be forward-looking statements within the meaning of the Securities Acts. Forward-looking statements reflect management s current views with respect to future events and financial performance and may include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts. The forward-looking statements in this presentation are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management's examination of historical operating trends, data contained in our records and other data available from third parties. Although Eagle Bulk Shipping Inc. believes that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, Eagle Bulk Shipping Inc. cannot assure you that it will achieve or accomplish these expectations, beliefs or projections. Important factors that, in our view, could cause actual results to differ materially from those discussed in the forwardlooking statements include the strength of world economies and currencies, general market conditions, including changes in charterhire rates and vessel values, changes in demand that may affect attitudes of time charterers to scheduled and unscheduled drydocking, changes in our vessel operating expenses, including dry-docking and insurance costs, or actions taken by regulatory authorities, ability of our counterparties to perform their obligations under sales agreements and charter contracts on a timely basis, potential liability from future litigation, domestic and international political conditions, potential disruption of shipping routes due to accidents and political events or acts by terrorists. Risks and uncertainties are further described in reports filed by Eagle Bulk Shipping Inc. with the US Securities and Exchange Commission. 1

3 Agenda Investment Thesis The Fleet Industry View Financial Overview Conclusion 2

4 Investment Thesis

5 Who is Eagle Bulk? Leading Owner of 55 Modern Dry Cargo Vessels 21 vessels in service 34 vessels under construction Investment Thesis Stability: 10 years of revenue visibility Upside: Growth plus profit sharing contracts Fastest Growing U.S. Listed Drybulk Company 300% growth through 2012 secured by 10-year bank facility Sustainable and Growing Distributable Cash Flow Consistent dividend history: $6.10 paid to date Current yield 10% 4

6 The Eagle Story Delivering Sustainable Growth Modern Fleet Focus on Supramax Class One of the largest Supramax owners On-the-water fleet s average age of 6 years 45 vessels acquired over last 3 years Newbuilding Program 35 new vessels (one delivered) Remaining delivery schedule: 2 vessels vessels vessels vessels vessels Charter Strategy Contracted revenues exceed $1 billion Open vessels provide upside potential 18 open vessels in profit-sharing charters Launch of Our First Newbuilding Vessel Wren in China - April

7 Our Customers Reputable multi-national charterers Insured contracts Under time charter contracts, charterers pay fuel, port and delay costs Charter hire revenues are paid every 15 days in advance, thereby minimizing receivables 6

8 The Fleet

9 Modern, High Quality Geared Fleet of Supramax Vessels On-the-Water Fleet * No. of Vessels Deadweight Tons (dwt) Vessel Type Delivery 21 Vessels 1.08 million dwt 18 Supramaxes 3 Handymaxes Supramax Newbuilding - 3 Groups of Sister Vessels 4 Vessels 0.21 million dwt 53,100 dwt Series Vessels 0.28 million dwt 56,000 dwt Series Vessels 1.45 million dwt 58,000 dwt Series * Includes Redwing delivery in September 2008 One Delivered, 34 More Vessels to Come 8

10 Newbuilding Program Secures Sustainable Growth Cumulative Owned Days Cumulative No. of Vessels Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 Quarterly Deliveries Consistent Quarterly Increases in Owned Days 9

11 Eagle On a Solid Growth Trajectory $ m EBITDA Owned Days ,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 - (2,000) (4,000) (6,000) Fleet CAGR of > 20% 3x increase in Owned Days 10

12 Contracted Revenues Provide Stability.... $ m Contracted Revenues No. of ships Owned Days 25, , ,000 10, , Contracted Gross Revenues in Excess of $1 Billion Support Dividends 11

13 .... Open Days Provide Revenue Upside $ m At Average Daily Rate for Open days Days $40,000 $50,000 $60,000 Open Days 9,000 8,000 7,000 6,000 5,000 4,000 3, ,000 1, Additional Vessels to Deliver in

14 Open Days and Vessel Deliveries Increase Revenues Low case growth rate: 67% % High case growth rate : 106% % Does not include 6,000 additional vessel days to be added in Total Revenue ($ m) $700 $600 $500 Open Days Revenue at $60,000 per day Open Days Revenue at $50,000 per day Open Days Revenue at $40,000 per day Fixed Revenue $400 $300 $200 $100 $ Total Revenue = Fixed Revenue + Open Revenue (as per legend above) Long Term Sustainable Growth Benefits Shareholders 13

15 Industry View

16 Internal Demand Drives Chinese Economy Domestic demand accounted for over 70% of China s economic growth in 2007 China plans to spend RMB 5.1 trn ($744 bn) on infrastructure expansion during the current five-year plan RMB 3.8 trn($555 bn) investment in transportation infrastructure Add 12,000km railways by 2010 Increase port capacity from 3.4 bn tons to potential 5.4 bn tons 28,000 24,000 20,000 16,000 12,000 8,000 4, % 42.1% 13.7% 35.3% China s GDP by Expenditure (RMB bn) Net exports Investment Consumption (Government) Consumption (household) Source: Ministry of Railway, Ministry of Construction, JPMorgan research, BHP Waterway 0.45 Power grid 1.0 Others 0.3 Railway 1.25 Roads th Five Year Plan Infrastructure Investment (RMB trn) Roads Railway Power grid Waterway Others Infrastructure Expansion Supports Demand for Dry Bulk Commodities 15

17 China s Post-earthquake Rebuilding Plan Totals $147 bln $ 147 bln three-year rebuilding plan Source: National Development and Reform Commission Demand for Cement and Steel Expected to Benefit Supramax Class 16

18 Charterers Attracted by Versatility of Supramax Vessels Capesize Panamax IRON ORE COAL GRAINS Handymax/Supramax OTHER ORES CEMENT COKE STEELS SCRAP IRON AGGREGATES MISC. In m tons 975, , , , , ,145 99,596 92, , ,307 Cardinal Condor Falcon Goldeneye Griffon Harrier Hawk I Heron Jaeger Kestrel I Kite Kittiwake Merlin Osprey I Peregrine Shrike Skua Sparrow Tern Eagle vessels carried 3.6 million tons of cargo in 1H 2008 MISC. cargoes include potash and alumina 57% of Eagle s 1H Cargoes were Capesize and Panamax cargoes 17

19 Handymax Class Vessels India s Dry Bulk Trade Workhorse Dry Bulk Vessel Port Calls Cape Handymax Panamax Handysize Port Calls 4, % 5% 3,500 3,000 3,003 3,015 3,282 2,500 23% 2,000 58% 1,500 1,600 1,553 1,496 1, , Source: Indian Ports Association, Portworld, Braemar, May Capes Panamax Handymax Handysize Eagle Vessels First to Call at new Indian Port of Krishnapatnam (near Chennai) Supramax Flexibility Ideal for Trade to China, India & Gulf States 18

20 Supply Cancellations = Fewer Ships for Global Demand Rising labor costs, material costs, and tighter financing cause orderbook cancellations Labor costs rose 18% y-on-y Steel prices surged 51% Other raw material and component costs up 24% Steel component cost of a newbuilding has risen from 30% to 75% in the last five years In order to pass on higher cost, SLS Shipbuilding became the first yard in S. Korea to include steel-price escalations clauses in contract. Limited survey of 19 Chinese shipyard managers confirms that in 1H08, 10 shipyards realize 21 vessel order cancellations. July report estimates that 150 capesizes on order will not be delivered. Many orders do not have refund guarantees in place (all Eagle Bulk s refund guarantees are issued) Source: Hong Kong brokerage CLSA, Shipbroker Gibsons, Lloyd s List 19

21 Financial Overview

22 1H 2008 Financial Highlights Net Income of $29.3 million or $0.62 per share, up 43% from 1H2007 Net Time Charter Revenues of $73.9 million, up 34% from 1H 2007 EBITDA 1 of $55.4 million, up 24% y-on-y Declared and paid Cash Dividend of $1.00 per share Fleet Utilization of 99.8% 1 EBITDA, as defined by our credit agreement, is Net Income plus Interest Expense, Depreciation and Amortization, and Exceptional Items 21

23 2H 2008 Estimated Cash Break-Even Levels $9,400 per day cash breakeven cost for 2H 2008 $2,200 $548 Dry-Dock Vessel Expenses Technical Mgt Fees $1,650 $4,704 Cash G&A Cash Interest (net) $296 Vessel expenses include crew wages and related costs, the cost of insurance including credit risk insurance, expenses relating to repairs and maintenance, the cost of spares and consumable stores and related inventory, tonnage taxes, pre-operating costs associated with the delivery of acquired vessels including providing the newly acquired vessels with initial provisions and stores, and other miscellaneous expenses. The Company is anticipating higher crewing costs and higher costs for oil based supplies including lubes and paints. The Company is also making allowance for constraints in yard drydocking capacity which has driven up drydocking costs. 22

24 Strong Balance Sheet BALANCE SHEET DATA June 30, 2008 June 30, 2007 (in $ 000's) Cash $62,997 $22,879 Other Current Assets 6,418 3,984 Vessels, net 725, ,572 Advances for Vessel Construction 1 380,672 64,785 Restricted Cash 10,276 7,325 Other Assets 22,640 9,109 TOTAL ASSETS 1,208, ,654 Current Liabilities 14,771 8,843 Long-term Debt 665, ,377 Other Liabilities 21,017 4,693 Stockholders' Equity 506, ,741 Book Capitalization 1,172, ,118 Net Debt 2 / Capitalization 53% 41% 1 Newbuild Costs to be Capitalized eliminating any impact on current cash flows 2 Net Debt is pro forma after taking into effect 2Q Dividend payments of $23.4 million ( 08), $19.6million ( 07) Secure Growth 23

25 $1.6 billion 10-year Revolver at Favorable Terms Syndicated by Royal Bank of Scotland Amount $1.6 billion Maturity July 2017 Interest Only until (at least) July 2012 Interest Margin Commitment Fees on undrawn amounts Availabilty in full for next * Balloon Libor + 95 basis points (base grid pricing) basis points 4 years $850 million * Thereafter semi-annual reduction in availability to Balloon Ample Liquidity for Growth

26 Conclusion

27 Conclusion - Accretive Growth Strategy CLEAR BENEFITS TO SHAREHOLDERS Fleet Growth begins in Q Ramp up in Open Days Re-charters of current fleet at strong current rates Significant increase in EBITDA Eagle Bulk Delivering Sustainable Growth 26

28 Eagle Bulk Shipping Inc.